Hawker Siddley Power Engineering Ltd vs National Insurance Corporation Ltd – CA NO. 351/95 F-2011

In the case between Hawker Siddley Power Engineering Ltd. and National Insurance Corporation Ltd., the court addressed whether the Plaintiff was entitled to payment under an Advance Payment Bond (APB) and a Performance Bond provided for a contract with a third party (BL Power Construction Ltd.), and if the demand for payment was fraudulent on the grounds that the advance had already been recovered. The court held that the demand under both the APB and Performance Bond was valid and enforceable, clarifying that such bonds covered any loss arising from non-fulfillment of contract terms, not merely advance payment recovery, unless there was cogent evidence of fraud. The principle that only clear proof of fraud can restrain payment under on-demand guarantees was reaffirmed, with reliance place